Success stories

Success stories

Succession Planning: a Masthead success story

Appeared in MoneyMarketing March 2013

Finding the right successor for your independent financial advisory business and ensuring a smooth transfer of clients and income streams is far easier when succession planning is facilitated by Masthead Financial Planning.

"Our solution for succession planning results in a win-win situation for the business owner, successor and clients,” says Francois Smith, CEO of Masthead Financial Planning. “We offer knowledge and experience to advisors who would like to find the right successor. We also provide a fair and clear way to implement the succession plan, as well as ongoing support to both parties to ensure a smooth transition."

Part of Masthead Financial Planning’s solution lies in its operational structure and independent value proposition, which accommodate both business owner and successor.

"We assist in matching successors with business owners and facilitate the integration of each successor into that business,” says Francois. “Relationships are contractually defined, so each party is aware of their expectations and responsibilities.

A suitable successor should have a similar level of product and industry knowledge as the business owner, respect the owner’s previous relationships with the clients and be willing to operate within the business’s existing framework and processes without making radical changes upfront.

To allow enough time to find and establish the suitability of a successor, Francois emphasises that advisors should focus on succession planning as soon as possible. This also provides sufficient time for clients to get to know the successor.

An advisor who successfully engaged in Masthead Financial Planning’s solution is Patrick Eke of Patrick Eke Brokers, a thriving financial advisory business in Port Elizabeth.

Patrick’s business has been built around delivering excellent service to his clients and they remain his top priority. However, Patrick’s goal is to move out of the Key Individual role and become a representative under Masthead Financial Planning. In this way he would be able to bring the fun back into his business by fulfilling the relationship manager role, marketing his business, meeting new clients and have more free time.

To reach this point, he knew he had to find a successor. "There were guys who wanted to come into my practice, but this presented too many loopholes," says Patrick, who was not prepared to employ a potential successor because of the high risk of choosing the wrong person.

One of the advisors who was keen to become Patrick’s successor was Brendan Smith. Brendan had called on Patrick as a broker consultant prior to joining Masthead Financial Planning in January 2012. He had been in the financial services industry since 2001 and had the relevant accreditation and qualifications.

Patrick was happy to consider Brendan as a potential successor. "I wanted somebody with self respect to eventually take over my business. He/she has to be a go-getter with passion for the industry, have a good personality, be a fun-loving, family person and be good at managing money. Brendan has these qualities, which I feel are important to my clients."

Masthead Financial Planning then assisted Patrick and Brendan to come to a workable and practical solution. Although Brendan remains in a contractual agreement with Masthead Financial Planning, he has entered into a succession agreement with Patrick.

After almost a year of operating through Masthead Financial Planning, Patrick has increasingly entrusted his business to Brendan. Brendan has become the main financial planner and now manages the daily business operations. And, after two decades at the helm of his company, Patrick is able to slowly relinquish his responsibilities, knowing his clients and business will be in the good care of his chosen successor.

"The process leading up to a hand-over can be stressful and requires a lot of dedication, however, with the guidance and mediation from Masthead Financial Planning, the process can be fair to both parties," says Brendan.